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Assume Brandon's Benefit Function for Water Is S(W)= √W and He

Question 57

Multiple Choice

Assume Brandon's benefit function for water is S(W) = √W and he consumes water both in droughts,WD,or in the rainy season,WR.Assume his current consumption bundle is WD = 400 and WR = 100 and the probability of drought is 0.75.What is Brandon's expected utility?


A) 10
B) 17.5
C) 20
D) 30

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